Brian Cowen (Laois-Offaly, Fianna Fail)

Excise is charged on petrol and diesel at 44 cent and 36 cent per litre, respectively. Excise rates in the EU are subject to minimum rates under the EU energy tax directive. Irish rates are around the EU average and are considerably lower than many of our trading partners, particularly the UK. While rates could be potentially reduced to the basic EU minima, I remind the Deputy that EU Finance Ministers agreed in September of last year, in the context of rising oil prices, that distortionary fiscal and other policy interventions that prevent the necessary price adjustments should be avoided. Reductions are costly — even a 2 cent reduction in petrol and diesel would cost in excess of €80 million per year. There may be a concern that reducing fuel taxes conveys a message that increasing consumption can be tolerated, especially in terms of CO2 emissions.

It must also be recognised that diesel and petrol prices have begun to fall significantly over recent weeks. Last year I made a decision to direct Exchequer funding into alternative motor fuels, for example, bio-fuels, through excise reliefs, rather than reducing excise on conventional fossil fuels. That scheme is estimated to cost in excess of €200 million over the next five years.

It is also important to point out that where the chemical marker and dye is illegally removed from marked gas oil to facilitate illegal use as auto diesel, it can still be identified as MGO on the basis of its sulphur content which is higher than auto diesel, as the Deputy indicated. In 2005 a total of 127 detections of laundered oil were made, including 21 at retail and distribution outlets and 71 involving hauliers. Over 300,000 litres of fuel and five tankers were seized.

In addition to its primary use in the agriculture sector and by construction industry machinery and vehicles designed for off-road use, green diesel is also used in commercial and domestic heating systems as well as in ships, fishing boats, pleasure craft and trains. In each of these areas it is allowable under EU law for green diesel to be used in these sectors and in this regard Ireland is similar to other EU member states. I will consider certain issues raised by the Deputy and revert to him in due course.

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